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The daily business briefing: October 12, 2018

Harold Maass
Cardboard posters of Facebook CEO Mark Zuckerberg in Washington
SAUL LOEB/AFP/Getty Images
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1.

Stocks struggle to recover from nosedive

U.S. stock-index futures rose along with global stocks early Friday, as markets struggled to shake off this week's plunge blamed on fears about rising interest rates and the impact of President Trump's trade wars on looming corporate earnings reports. On Thursday, the S&P 500 fell by 2.1 percent, its sixth straight day of losses. The Dow Jones Industrial Average also fell by 2.1 percent, and the Nasdaq Composite lost 1.3 percent. Analysts warned that investors could panic further if earnings season gets off to a bumpy start. "People fear that it will be harder to snap back if we're seeing a cyclical top in earnings with those two headwinds, which are not going away," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. [Reuters]

2.

Facebook purges 800 political spam accounts

Facebook said Thursday that it had purged more than 800 accounts for flooding users with political content. Facebook said the spiked accounts and pages violated its spam policies. It said most of the accounts belonged to domestic entities that used clickbait to drive traffic to their websites so it could barrage them with ads. The accounts did not appear to be linked to Russia, Facebook officials said. One of the pages called itself "the first publication to endorse President Donald J. Trump." The decision could prove sensitive, as some critics, including President Trump, have accused Facebook and other social media of censoring conservative content, and Facebook removed the 559 pages and 251 accounts just weeks before the midterm elections. [The Washington Post]

3.

Mortgage rates rise to highest level in 7 years

Long-term U.S. mortgage rates jumped to their highest levels in seven years this week, potentially adding to anxiety over interest rates that has roiled global stock markets. The average rate for a 30-year fixed-rate mortgage jumped from 4.71 percent last week to 4.9 percent this week, mortgage buyer Freddie Mac said Thursday. A year ago, that rate was 3.91 percent. The average 15-year mortgage rate rose to 4.29 percent this week, from 4.15 percent last week. The Federal Reserve has signaled confidence that the economy is strong enough to justify raising a key interest rate by year's end in what would be the fourth increase in 2018. Fears of higher rates have sparked a global stock selloff. President Trump has repeatedly blamed falling stocks on the Fed, which he says has "gone crazy" by raising rates too fast. [The Associated Press]

4.

Fyre Fest organizer sentenced to 6 years for fraud

Billy McFarland, the 26-year-old organizer of the failed 2017 Fyre Fest music festival in the Bahamas, was sentenced Thursday to six years in prison for fraud. People paid thousands of dollars for tickets and accommodations, expecting a luxury island musical festival. Instead, they got FEMA tents and cheese sandwiches, but no concert. Celebrities, including Kendall Jenner and Bella Hadid, endorsed the event via social media. Investors lost $26 million, and the judge ordered McFarland to forfeit roughly that amount. McFarland pleaded guilty in March to wire fraud charges and in July pleaded guilty to various other fraud charges stemming from a separate ticket scam. He apologized during his sentencing, saying he "made decisions that were a slap in the face to everything my family tried to teach me." [NBC News]

5.

Business groups release anti-tariff ads ahead of midterms

A coalition of business groups has launched an ad telling people voting in the coming midterm elections that President Trump's trade tariffs are costing U.S. businesses and consumers $1.4 billion per month. The group, which calls itself Tariffs Hurt the Heartland, said that tariff costs have tripled since last year in Michigan, and doubled in Texas, Illinois, West Virginia, and other states. "These tariffs are taxes on American businesses and consumers," said group spokeswoman Angela Hofmann. "They aren't paid by other countries. They are paid here at home." Trump has said his tariffs are necessary to get other countries to treat the U.S. more fairly, and to eliminate massive trade deficits he says are killing American jobs. [Reuters]